Press Release

Overall, this seems like a fantastic development to me.

* Their last 10-Q had already disclosed another diabetes trial would be needed to demonstrate safety so this isn't news. Stopping it after the efficacy readout will also heavily reduce cash burn as they seek to partner.

* They were always going to have to partner after the Phase III efficacy results given the salesforce & marketing budget needed for a diabetes drug. Again, move on – there’s nothing to see here.

* A new drug to treat high triglycerides is a big deal. Take Amarin Corp whose only pipeline compound is in Phase III to treat high triglycerides. It currently has an enterprise value of $211m. Given this diabetes trial could now also be regarded as a Phase IIIa trial on triglycerides, an enterprise value of perhaps 50% of Amarin's could be ascribed to Spherix. That's a mere 5 times Spherix current capitalisation.

* I haven't done DD on Spherix's patents but I'm guessing they don't mention D-Tagatose as effective against triglycerides. If so, they could file a method-of-use patent with coverage beyond 2030 (and short patent coverage is Spherix's main current problem).

* The press release hints the triglyceride efficacy is dose-related - i.e. 7.5g dose led to a 21% lower count than 2.5g. The Phase III trial is using a higher dose again at 15g.

* The Phase II trial is also reasonably powered with 172 patients spread across 3 dosing arms. That’s an average of 57 patients per dosing arm being followed for 6 months.

* A reduction of 21% looks clinically meaningful. For instance, Amarin's latest presentation on their website shows 6 Japanese studies of their compound gave an average 21.4% triglyceride reduction.

* The press release says they are “… eagerly awaiting the efficacy results in a few weeks” which is a lot tighter than other mentions of “later this summer”. I’d speculate this means data in early August – when also taking account of enrollment completing on 12 January 2010 & the 6 month treatment phase.

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